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If you’re nearing retirement and you have a sizeable IRA balance, you face some significant decisions surrounding required withdrawals and taxes. Converting a traditional IRA into a Roth account is one move that can increase your planning flexibility. And even at 64 years old, shifting an account from a tax-deferred to tax-free status can result in greater control over income distributions, as well as potential estate planning benefits.
A financial advisor can help decide if Roth conversions are right for you. Speak with a fiduciary financial advisor today.
Roth Conversion Essentials
When you do a Roth conversion, you transfer funds from a traditional traditional IRA into a Roth IRA. There are no age restrictions on doing Roth conversions, but the assets must remain in the Roth IRA for at least five years after the conversion or they could be subject to a 10% early withdrawal penalty. Then again, this five-year rule on Roth conversions does not apply to people who have reached age 59 ½.
Roth conversions can be appealing because withdrawals from Roth accounts can be made tax-free, as long as the account was opened five years before the withdrawal. Roth accounts are also not subject to required minimum distributions (RMDs). That means retirees don’t have to worry about RMDs adding taxable income and pushing them into a higher marginal income tax bracket.
However, the immediate tax bill that comes due is the biggest challenge of doing a Roth conversion. If you do such a conversion, the funds in your IRA that were previously tax deferred are treated as taxable income in the year the conversion happens. A 64-year-old couple converting $750,000 from a traditional IRA to a Roth would generate a substantial tax obligation. If the $750,000 is treated as ordinary income, as it likely would be, it could push you into the highest 37% federal bracket and result in a six-figure tax bill.
Keep in mind that a financial advisor can help you project how much you could owe in taxes on a Roth conversion and potentially develop an alternative strategy.
Roth Conversion Options
The all-at-once conversion method is not the only approach. It’s also possible to spread the conversion out over several years, potentially reducing the tax impact. If you and your spouse are both retired and receive $48,768 in combined annual Social Security benefits (the average retirement benefit in July 2026 was around $2,032 per month) there are several ways that a $750,000 conversion could play out.
If you convert the entire $750,000 IRA balance into a Roth IRA in the 2026 tax year, the entire sum will likely be treated as ordinary income with taxes due on your next return. After taking the standard deduction of $32,200 available to married couples filing jointly, $717,800 of this amount would be taxable. This would push you and your spouse into the top 37% marginal tax bracket and produce a tax bill of approximately $188,769.
Alternatively, by converting $75,000 per year for 10 years, you would only owe income tax on the $75,000 that gets converted each year. With that income, $41,453 of your Social Security benefits would be subject to income taxes, giving you a taxable income of $84,253.
Based on 2026 federal income tax brackets, you would owe approximately $9,614 in federal income taxes on the first $75,000 conversion. If tax brackets, deductions and your Social Security benefits remained unchanged over the full 10 years, that would amount to approximately $96,140 in federal income taxes.
A financial advisor can help you run calculations like this one and then make decisions based on those projections.
Choosing Your Approach
When deciding whether to convert a traditional IRA into a Roth, you have to look at more than just federal income taxes on the converted amount. Other concerns include state income taxes, taxes on Social Security benefits and potential estate planning consequences.
The income that’s realized from Roth conversions can also impact your Medicare premiums and tax credits so consider those effects as well. Furthermore, you’ll need access to non-retirement cash to pay conversion taxes. Otherwise, you might have to liquidate investments at possibly inopportune times. A financial advisor can run projections and help you determine when to do a Roth conversion and how much.
Wondering how much your Roth IRA could grow over the next five, 10 or 20 years? Use SmartAsset’s Future Value Calculator to run the numbers.
Bottom Line
Roth IRA conversions allow investors to take more control of how their money is ultimately taxed, while also unlocking tax-free income in retirement. Partial conversions carried out over multiple years may result in a lighter tax liability. However, comparing current and future tax rates, analyzing total costs, weighing estate planning considerations, and modeling different Roth conversion approaches tailored to your particular financial situation are all key parts of this process.
Retirement Planning Tips
- A Roth conversion decision warrants an in-depth review from all angles. Consider enlisting a financial advisor to help you assess if and how to do a large IRA conversion. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Before making any major decisions about what to do with your retirement funds, you’ll want to know how much you’re likely to have saved up when retirement arrives. SmartAsset’s retirement calculator can help you project how much you could have and whether you’re on track to meet your recommended savings target.
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